In the midst of a global DRAM shortage, Digitimes reports that the market prices for graphics memory from Samsung and SK Hynix have increased by over 30% for August. This latest jump in memory prices is apparently due to the pair of DRAM manufacturers repurposing part of their VRAM production capacities for server and smartphone memories instead. As Digitimes’ sources report, this VRAM pricing is expected to increase further in September, impacting graphics card and gaming notebook manufacturers. Consumers have already felt the pain through skyrocketing DDR4 prices, and TrendForce/DRAMeXchange expects the upward trend of PC DRAM chips to continue to 2018.

Generally speaking, this production prioritization is not new. Late last year, the top three memory suppliers, Samsung (55% market share), SK Hynix (35% market share), and Micron (10% market share) shifted production capacity to prioritize servers and smartphones, causing the initial spike in PC DRAM prices. Overall, DRAMeXchange attributes the tight supply to lack of short term capacity expansion, as well as yield issues with new processes. The research firm had also noted that capacity expansion will be rather subdued as manufacturers try to keep commanding the higher margins of an undersupply environment.

In light of recent GDDR6 announcements by Micron and SK Hynix, these supply/price issues could have knock-on effects for both current and upcoming graphics cards. Additionally, as both Samsung and SK Hynix are the only HBM2 suppliers, HBM2-equipped cards may be adversely constrained by supply. Earlier this month, an SK Hynix executive stated that customers were willing to pay 2.5 times more for HBM2 over HBM1; this sentiment may soon be put to the test. The situation with Micron is a little less clear, as they not only have their unique GDDR5X memory, but also may not have raised VRAM prices. If they haven't, they may have an opportunity on their hands.

Because when you have supply for which there is no demand, you get the exact opposite of shortage - you get oversupply.

Besides, the differences between old and new gen is always very small. In the case of dram it means that the previous gen product will be a little bigger and use a little more power.

And if your reasoning skills are not up to the task, I will save you the effort - a little bigger ram modules that use a little more energy is INFINITELY BETTER than NO RAM AT ALL. Because you know, division by zero results in infinity.

There is ABSOLUTELY nothing preventing the industry from running existing production lines until the new lines bring capacity up to the requirements. The ONLY reason they don't do that is because THEY INTENTIONALLY create tight supply, this is actually something they carefully calculate to find the sweet spot that will result in the least missed sale opportunities and the highest possible price they could justify.

And IT IS NOT CONSUMERS that call for this, it is the manufacturers, the consumer is not at a benefit here, ONLY AT A LOSS, because inflated prices will actually make the new product less desirable than the old product. If you factor in the difference in size and the extra power the older product would use in its life time, that will be SIGNIFICANTLY LESS than the price jacking difference due to a deliberately engineered shortage. That's how it works - the industry does it for extra profit, and that profit comes from consumers. And I don't think that any consumer would ever demand to get a worse deal, save for individuals with serious psychological disorders (like mentally retarded).Reply

Nope, that is not true. There might be some exceptions, but the general practice is that when older older production lines capacity is no longer needed, they simply begin production of something that is less critical to new process. It is usually a few years of churning out "secondary" production before a production line is dissembled and and sold to some poorer chip maker who cannot afford cutting edge tooling.

You don't shut down your bulk production line to make room for a new, untested production line with immature yield and possibly even manufacturing problems. That's moronic to say the least. New production lines are either assembled on a new spot, or at most, in the place of a severely outdated and practically obsolete production line that gets decommissioned. You never ever stop your current line the moment you begin making a new one, you never ever decommission your current mature line to make room for a brand new, untested line. You never ever remove an existing line the moment you have a newer one either, it remains operational for years doing other stuff.Reply

It might be news to you, but semiconductor foundries, or fabs as they call them, are not limited to one production line. Fabs are constructed big enough to facilitate multiple production lines, and fabs always have multiple generations of production lines working parallel, you have your current production line making what's most critical economically, you have your older lines making less important chips like microcontrollers and such, and you have your next gen production line for testing.

The moment the new gen line passes testing and is deemed economically viable, it is expanded in the place of the oldest, rather than your current line. Because it will still take some time before the new gen matures to the point of becoming the "current".

Tooling makes leaps every couple of years or so, and the leaps are not really all that big. It makes zero sense to decommission a 2 year old production line even if your new gen line is up to the yield and capacity requirement. The "old" production line is still very capable of producing a wide range of chips with very good economic viability.

Granted, there are fabs which operate at one process node in their entirity, but those are luxuries that only the biggest chipmakers can afford, and they have a multitude of fabs, and the above principle applies nonetheless, it only extends to work on fab level rather than production line level. A new gen fab will never ever shut down a current gen fab to replace it, it will either be a newly built fab, or a fab whose equipment is significantly outdated.

Take intel for example, which has been process leader for a very long time. They currently operate like 10 fabs, and despite having their "current" lines at 14 nm, they still operate fabs at 22, 32, 45 and even 65 nm. And their new 450mm 7nm fab will not immediately replace any of those outdated, "low demand" fabs, they will build a new fab for it. And they have only 2 of their fabs outfitted to the "current" 14 nm process, with two additional which run 14 and 22 nm in parallel and another that runs 14 and is testing 10 nm. Reply

It shows who is an "arrogant idi*t", and also obviously a hypocrite on top of that...

There is no room for discussion here. What you are doing is not discussing anything, but demonstrating exemplary cattle mentality trying to justify the actions of those who exploit you with nonsensical arguments, if they can even be considered arguments.

Every major semiconductor maker has multiple fabs operating at different process nodes. None of them replace existing equipment before it completely runs its course, which usually takes 3-4 generations of process tooling.

But I get it, you came here with the idea to try and act like you are smart and know a good reason for the shortage and price hacking that is other than deliberate, then your below-childish argument was pwned by facts, and now that your attempt at looking smart failed, so now you are sore and resort to name calling. Which is perfectly in line with the intellectual level you have displayed throughout that so called "discussion", or lack thereof.Reply

The DRAM market had been in a severe oversupply before the shortage started in 2016. Suppliers were losing money and nobody invested in new DRAM fabs as a result. Hence supply growth has been fully dependent on technology transition, but it's always a gradually slow way to improve supply, especially as DRAM is starting to run into the laws of physics and every generation is providing less gains in Gbit/mm^2.Reply

I am sure this sounds very convincing to you, but my requirements for logic are higher, and I see a number of issues with that convenient story.

You don't go from oversupply to shortage in an instant just because of YoY demand growths. It wasn't merely the product of "not investing" in fabs. If the available capacity was sufficient enough to introduce an oversupply last year, the same production capacity should not have a problem meeting demand this year, especially not with the build up of idle inventory.

They were so unhappy with the fact that sufficient supply and competition drove prices and their profit margins down. They'd have to actually deliberately cut production, which is in essence the very definition of artificial scarcity. It wasn't a product of lack of production capacity, it was a product of them being unhappy with lowering prices. It wouldn't take a genius to realize that this is NOT in the interest in any of the big chip makers. Why should they make as much as they can and have their profit margins suffer, when they can actually make more money on making less chips.

It is funny that people seem to so often need a reminder that making stuff is not the primary objective. It is making money. They make chips so they can make money. Money takes precedence. I am pretty sure they all have scores of analysts whose daily labor is to estimate supply trends, which are fairly well predictable, there are basically only two factors at play here - market saturation and technology upgrades. The oversupply was definitely not because of failure to predict demand, it was more like "competition", they were testing each other how low is every one of them willing to go, and how long can they afford to, which is very useful to estimate the actual potency of your competitors, not to mention it will push the weaker ones out of the market for good, and you get to have it for yourself. The shortage is not accidental neither, it was just as deliberate as the oversupply, the latter of which also ends up being used as a justification for the former. If your story holds true, then both the oversupply and the shortage should hurt chip-makers, which I bet is not something that you will be able to detect in their financial performance stats. They did take a minor hit on the oversupply, but only because it was a pre-condition, required for a business strategy that will end up making tremendously more money, completely offsetting the loss due to oversupply, ending up making significantly more money in that period compared to what they would have made had they kept supply adequate. They deliberately rock the boat to make those waves, which are the distraction and justification they need to milk the market as much as possible. Think of the oversupply as an "investment" of a sort. An investment with ample returns.

And finally, this is neither unprecedented nor even new. The market has been subject to manipulations through its entire historical existence. Reply